Asian stock markets fell on Tuesday as a fresh rise in Middle East tensions fueled fears over a fragile truce between the United States and Iran, with the two sides showing no progress on a deal to reopen the Strait of Hormuz.
Although oil prices fell on Tuesday, they held on to most of the big gains from Monday, when they rallied after a firefight over a key shipping route and reports by the United Arab Emirates of an attack on an installation in the emirate of Fujairah.
The clashes came after President Donald Trump announced a mission called “Project Freedom,” which he said had the humanitarian goal of helping ships from neutral countries leave the Persian Gulf and ensure the safety of their crews.
Trump later warned, according to Fox News, that Iran could be “wiped off the face of the earth” if it attacked American ships.
Crude oil prices rose sharply on Monday – Brent jumped nearly six percent – after a US admiral said US forces had sunk six smaller Iranian vessels. Iran denied this and claimed that no ships were destroyed, while earlier warning shots were fired at American warships.
The United Arab Emirates said an energy facility in Fujairah had been hit, while its defense ministry said four cruise missiles had been launched from Iran, three of which were shot down and one fell into the sea.
A senior Iranian military official did not deny the attacks, but said they were the result of “US military adventurism” aimed at creating passage through the strait.
Iranian Foreign Minister Abbas Araghchi said that the clashes show that “there is no military solution to the political crisis” and pointed to Pakistan’s mediation efforts.
In financial markets, U.S. West Texas Intermediate crude fell more than two percent, while Brent fell more than one percent, but prices remained high.
Asian bourses fell, including Hong Kong, Singapore, Bombay, Bangkok, Manila and Wellington, while markets in Sydney fell further after the central bank of Australia raised interest rates.
European markets were mixed – London fell, while Paris and Frankfurt posted gains.
Experts warn that even if the crisis subsides, the recovery of energy markets and industrial production could take a long time due to disrupted supply chains and instability in the region.
(Vijesti.ba)
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